Financial Data and Key Metrics Changes - The company reported total net sales of $218.1 million for Q2 2025, a decrease of $24.6 million or 10.1% from Q2 2024 [12] - Adjusted EBITDA was $76.3 million, a decrease of $10.9 million or 12.5% from the previous year, with an adjusted EBITDA margin of 35%, down approximately 90 basis points from Q2 2024 [15][19] - Free cash flow for the quarter was $51.7 million, an increase of $14.9 million compared to Q2 2024 [23] Business Line Data and Key Metrics Changes - Software Solutions net sales grew approximately 8% year over year, with recurring compliance software offerings growing about 15% [5][12] - Capital Markets Software Solutions segment net sales were $59.1 million, an increase of 3.1% year over year, driven by Active Disclosure [16] - Capital Markets Compliance and Communications Management segment net sales decreased by 17.8% to $93.5 million, primarily due to lower transactional revenue [17] Market Data and Key Metrics Changes - The company experienced a decline in capital markets transactional revenue, which was at the lowest level in its history, with $34.8 million recorded in Q2 [17][18] - The overall transactional activity in Q2 remained well below historical norms, with IPO transactions and large public company M&A deals below last year's levels [18] - The IPO market showed signs of recovery with a total of 14 IPOs greater than $100 million in Q2, but the overall number of IPOs in the first half of 2025 decreased by 14% compared to the same period in 2024 [36][37] Company Strategy and Development Direction - The company is focused on transforming into a leading provider of compliance and regulatory solutions, predominantly through software and services [11] - The strategy includes a shift towards recurring software offerings and improving operational efficiencies while managing costs [11][28] - The company remains committed to its five-year plan updated in February, aiming for a sustainable business model despite ongoing market challenges [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market conditions and a positive trajectory in the second quarter, despite a prolonged downturn in capital markets transactional activity [6][28] - The company anticipates Q3 consolidated net sales in the range of $165 million to $175 million, reflecting a cautious outlook due to lower print and distribution sales [25] - Management highlighted the importance of maintaining a strong balance sheet and robust free cash flow to support long-term value creation [28] Other Important Information - The company repurchased approximately 787,000 shares for $34.3 million during Q2, with a new share repurchase program authorized for up to $150 million [24][25] - Non-GAAP unallocated corporate expenses were $9.7 million, reflecting higher investments in transformation and healthcare expenses [23] Q&A Session Summary Question: Can you provide more detail on the assumptions behind the Q3 guidance? - Management indicated that the guidance for transactional sales in Q3 reflects a cautious optimism based on recent market activity, with a range of $35 million to $40 million [33][34] Question: What is the outlook for the capital markets given the improving pipeline? - Management acknowledged the improving pipeline but emphasized the uncertainty in timing and the need for a conservative outlook [57][58] Question: How does the company view share repurchases moving forward? - Management reiterated that share repurchases are a key component of capital allocation, with a strategy to be more aggressive at lower stock prices [60][62] Question: Any updates on the pension plan annuitization process? - Management confirmed that the annuitization process is underway and expected to occur in Q3, with further updates to be provided [64]

Company Overview - DFIN is a leader in assisting companies with regulatory reporting requirements, holding the 1 SEC Filing Agent position for both corporations and fund companies[10] - DFIN's portfolio includes market-leading software solutions like ArcSuite, ActiveDisclosure and Venue, with ~80% of the top 50 global fund complexes as clients[10] - DFIN's offerings are essential for recurring regulatory compliance needs and capital markets transactions such as IPOs and M&A[11] Financial Performance and Metrics (Q2 2025 TTM) - Software sales reached $341 million, expected to grow at a double-digit rate annually[14] - The company's revenue mix is shifting towards high-margin software solutions, offsetting declining low-margin print & distribution[14] - Adjusted EBITDA reached $219.4 million, resulting in an attractive valuation with EV / Q2 2025 TTM EBITDA at 9.1x[25, 27] - Free Cash Flow was $109.3 million, leading to a Free Cash Flow multiple of 16.8x[25] - Net debt stood at $156.3 million, resulting in a net leverage ratio of 0.7x[21, 24] Segment Performance (Q2 2025 TTM) - Capital Markets segment net sales totaled $509 million, with $214 million from Software Solutions and $294 million from Compliance & Communications Management[12] - Investment Companies segment net sales were $247 million, comprising $126 million from Software Solutions and $120 million from Compliance & Communications Management[12] - Capital Markets EBITDA was $170 million with a 33% margin, while Investment Companies EBITDA was $87 million with a 35% margin[12] Capital Allocation and Shareholder Focus - The company repurchased approximately 787,000 shares of common stock during Q2 2025 for $34.3 million, at an average price of $43.56 per share[63] - A new stock repurchase program of up to $150 million was authorized, expiring December 31, 2026[50, 63]

Financial Data and Key Metrics Changes - The company reported net sales of $201.1 million for Q1 2025, a decrease of $2.3 million or 1.1% from Q1 2024 [19] - Adjusted EBITDA was $68.2 million, an increase of $13 million or 23.6% year-over-year, with an adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [21][19] - Adjusted non-GAAP gross margin was 63.7%, approximately 310 basis points higher than Q1 2024, driven by a favorable sales mix and cost control initiatives [20] Business Line Data and Key Metrics Changes - Software Solutions net sales represented 42.1% of total net sales, an increase of approximately 260 basis points year-over-year [7] - ActiveDisclosure sales grew approximately 11% year-over-year, while Venue sales declined by approximately 9% [22] - The Investment Company Software Solutions segment saw net sales increase by 20.2% year-over-year, primarily driven by tailored shareholder report solutions [26] Market Data and Key Metrics Changes - Capital Markets Compliance revenue decreased by $7.8 million year-over-year, primarily due to the exit from low-margin proxy statement activities [25] - The global equity deal market showed modest recovery in January and February but faced increased volatility in March, impacting overall deal activity [25] - Approximately 75% of the company's revenue is based on recurring sources, providing stability during market volatility [14] Company Strategy and Development Direction - The company aims to derive approximately 60% of total net sales from Software Solutions by 2028, focusing on becoming a software-centric company [8] - Continued investment in software offerings and technologies, including automation and AI-driven tools, is a priority to support growth and operational efficiency [12] - The company is committed to maintaining a disciplined approach to capital allocation, including share repurchases and organic investments [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty in the global operating environment but expressed confidence in the company's strong balance sheet and liquidity to execute its strategy [16] - The company does not anticipate significant operational impacts from recent tariffs due to its predominantly U.S.-based operations [13] - Future growth is expected to be supported by latent demand for transactions and a favorable regulatory landscape, although market volatility must subside for this to materialize [36] Other Important Information - The company amended and extended its credit agreement, providing for a $115 million Term Loan A and extending the maturity of a $300 million revolving credit facility [17] - Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing [30] - The company repurchased approximately 861,000 shares for $41.8 million during the first quarter, with additional repurchases in April [31] Q&A Session Summary Question: What drove the higher margins and revenue performance? - Management attributed the higher margins to incremental cost reduction actions and higher capital markets transactional sales, which exceeded guidance [38][39] Question: Can you provide more detail on Q2 segment-level guidance? - Management expects ActiveDisclosure to continue performing well, while Venue will face tough comparisons. Compliance revenue is expected to decline modestly [42][43] Question: How has the active disclosure side performed in terms of market share? - Management noted continued progress in client growth and revenue retention, with a strong market position in active disclosure services [54][60] Question: What is the outlook for share repurchases? - Management indicated a consistent approach to being more aggressive at lower prices while maintaining share repurchases as a priority in capital deployment [79][82]

Financial Data and Key Metrics Changes - The company reported net sales of $201.1 million for Q1 2025, a decrease of $2.3 million or 1.1% from Q1 2024 [18] - Adjusted EBITDA was $68.2 million, an increase of $13 million or 23.6% year-over-year, with an adjusted EBITDA margin of 33.9%, up approximately 680 basis points from the previous year [20] - Adjusted non-GAAP gross margin was 63.7%, approximately 310 basis points higher than Q1 2024, driven by a favorable sales mix and cost control initiatives [18][19] Business Line Data and Key Metrics Changes - Software Solutions net sales represented 42.1% of total net sales, an increase of approximately 260 basis points from the previous year, with organic growth of about 6% [6][7] - ActiveDisclosure sales grew approximately 11%, while Venue sales declined by about 9% year-over-year [20][21] - Capital Markets Compliance and Communications Management segment net sales decreased by $7.2 million or 7.6% on an organic basis, primarily due to lower compliance volume [24] Market Data and Key Metrics Changes - Approximately 75% of the company's revenue is based on recurring sources, providing stability during market volatility [14] - The global deal environment remained soft, with capital markets transactional revenue at $48.6 million, a modest increase from the previous year [24] - The company maintained a strong market share despite the challenging transactional environment [24] Company Strategy and Development Direction - The company aims to derive approximately 60% of total net sales from Software Solutions by 2028, focusing on becoming a software-centric company [7] - Investments are being made in software offerings and technologies, including automation and AI-driven tools, to modernize operations and enhance client experience [12] - The company is prioritizing high-quality transactions and has seen a reduction in bad debt expense due to this strategy [19][38] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging operating environment driven by market volatility and ongoing uncertainty, with expectations for Q2 2025 net sales in the range of $215 million to $235 million [31] - The company does not foresee significant impacts from recently announced tariffs due to its predominantly U.S.-based operations [13] - Management remains optimistic about the latent demand for transactions and a favorable regulatory landscape supporting future growth [15][34] Other Important Information - The company repurchased approximately 861,000 shares for $41.8 million during Q1 2025, with an additional 657,000 shares repurchased in April [30] - Free cash flow for the quarter was negative $51 million, primarily due to unfavorable working capital timing [28][29] - The company amended and extended its credit agreement, providing for a $115 million Term Loan A and extending the maturity of a $300 million revolving credit facility [16] Q&A Session Summary Question: What drove the higher margins and revenue performance? - Management attributed the higher margins to incremental cost reduction actions and higher capital markets transactional sales, which exceeded guidance [36][37] Question: Can you provide more detail on Q2 guidance by segment? - Management expects ActiveDisclosure to perform well, while Venue will face tough comparisons. Compliance revenue is expected to decline modestly [40][41] Question: How is the competitive landscape for ActiveDisclosure? - Management noted that they are seeing good progress in client acquisition and pricing, with a strong market position due to their ability to invest in software features [51][52] Question: What is the outlook for ARC Suite growth? - Management indicated that growth is expected to continue, driven by the tailored shareholder report regulation and strong fundamentals in the ARC Suite platform [67][70] Question: Will share buybacks continue at the current pace? - Management confirmed that they will remain aggressive with share repurchases at lower prices while maintaining a disciplined approach to capital deployment [77][81]